Where it all started

Forty years after the Tazara Railroad marked the beginning of modern China’s involvement in Africa, the country’s relationship with Tanzania is still one of the best on the continent

By Iain Manley

In February 2009, during a state visit to Tanzania, Hu Jintao said China's ties with the country could "be viewed as an exemplary relationship of sincerity, solidarity and co-operation between China and an African country, and for that matter between two developing countries."

Although this might sound a lot like diplomatic hyperbole, China’s president was not exaggerating, at least not entirely.

His country’s ties with Tanzania are among the oldest and strongest it has with any African nation, and China’s emergence as one of the continent’s most important markets and sources of investment bodes well for the East African country, if it can leverage this special relationship, along with its strategic location, to transform itself into a regional hub.

A Lasting Relationship

China and Tanzania have had formal diplomatic ties since the latter was established in 1964, at a time when many of Africa’s newly independent nations preferred to recognize Taiwan. Julius Nyerere, the country’s first president, visited China 13 times during his lifetime, mostly during the course of his 20-year rule. He built a strong relationship with Mao Zedong — both countries make occasional references to the bond shared by their founding fathers — and, after an early trip there in 1965, became an admirer of China’s system of agricultural collectivization. (He was, admittedly, given a largely inaccurate picture of the system, and its supposed success.)

Chinese collectivization is seen by some as an inspiration for Ujamaa, the set of political and economic policies first outlined by Nyerere in his famous Arusha declaration of 1967. Ujamaa centralized political power and turned Tanzania into a single party state. Key industries were nationalized and an emphasis was placed on self-sufficiency, and an end to Tanzania’s dependence on aid from the United Kingdom, its former imperial master, and the UK’s capitalist allies. At the heart of Ujamaa was the collectivization of agriculture in the country’s villages, which led to forced relocations, purportedly so that the population could be connected to infrastructure – but in many cases the promised infrastructure was never put in place.

Tazara

One major infrastructure project was completed during the Ujamaa era: the highly symbolic Tazara railway, which connected landlocked Zambia with Dar es Salaam, Tanzania’s capital city and most important port. Zambia had also recently gained independence from Britain, but political conditions in neighboring Rhodesia (now Zimbabwe) and Angola threatened the copper exports that were a cornerstone of the Zambian economy.

It was initially thought that finance for the project would come from the World Bank, but after a feasibility study concluded that the route was not economically viable, China stepped in, thanks in no small part to Nyerere’s relationship with Mao. The project was completed between 1970 and 1976, at a cost of $500 million, making it the largest foreign aid project in Chinese history. It was built by an estimated 50,000 Tanzanian and an additional 25,000 Chinese laborers, with funds generated largely by the sale locally of consumer goods from China. Tazara is considered a prototype for Chinese aid projects in Africa, and is mentioned whenever the subject is raised, but China was involved in other projects in Tanzania at roughly the same time, including the Friendship Textile Mill and Kiwira Coal Mine, which remain important today.

In return for China’s munificence, Tanzania became one of the staunchest supporters of the One-China policy at the UN. Nyerere leveraged his status as one of Africa’s most prominent liberation leaders and a founder of the Non-Aligned Movement to gather support for the PRC’s accession to the UN — and the consequent ousting of the ROC — which only succeeded after 20 failed votes. When the vote eventually passed, in 1971, Tanzania’s representative, Salim Ahamed Salim, is said to have danced on the floor of the UN assembly hall.

Bad Advice

Despite China’s aid, Ujamaa was a complete economic disaster. Tanzania went from being Africa’s largest exporter of agricultural products at liberation to its largest importer. Nearly half of the 330 companies nationalized by Nyerere went bankrupt, and the remainder were limping along at 20 percent of capacity by the time he retired in 1985. There were some positives. Tanzania has one of Africa’s highest adult literacy rates, a result of the universal education policy instituted during the Ujamaa era. Perhaps most importantly, Ujamaa is credited with instilling a sense of national identity in Tanzania, which is often used to explain the relative absence of domestic conflict in the country today. Nevertheless, by 1985, Tanzanians were ready to play the capitalist’s game and enter the free market.

In 1986, Tanzania began an economic recovery program under the guidance of the IMF and World Bank. Typical of structural adjustment diktat at the time, it emphasized privatization, deregulation and trade liberalization. The program is considered a success and good example by many in the development community, but Tanzania’s political elites rankled under the conditions imposed by donor countries. Comparisons to China, which charted its own course from socialism to the free market at roughly the same time, with much greater success, are frequently made.

By the late nineties, Tanzania’s GDP was growing at a steady 5 percent per annum. The environment for foreign direct investment was much improved, especially after the establishment of the Tanzanian Investment Center, a one stop shop for potential investors, in 1997, and between 1999 and 2004 the amount of foreign private capital in the country tripled, reaching $6 billion by the end of the period. But the Tanzanian economy remains almost entirely agricultural. Agriculture accounts for 85 percent of exports and employs 80 percent of the work force. Although there are said to be large mineral deposits that remain undiscovered, the country currently exports very few natural resources.

Today

China’s recent expansion in Africa has been driven predominantly by its appetite for natural resources, so as a source of Tanzania’s FDI, China remains far behind other countries. Accurate statistics are hard to find, but in a statement made earlier this year, Chinese Minister of Commerce Chen Deming said that there are more than 100 Chinese companies doing business in Tanzania with an accumulated direct investment of roughly $200 million. This contrasts starkly with the $7 billion plus that entered the country in 2009, according to the UN. Estimates of the number of Chinese people in the country vary wildly, from the 239 Chinese nationals issued work or residence permits in 2000, to a mysterious 10,000 reported by Xinhua in 2008.

As a trading partner, China is much more important. It is Tanzania’s largest source of imports, and third largest export market, with a trade balance that weighs sharply in China’s favor. Bilateral trade has increased tenfold over the last decade, reaching $106 million by the end of 2009. Tanzania also remains the largest beneficiary of Chinese aid in Africa to this day. Much of this money has been spent on maintaining projects Tanzanians were expected to administer themselves. The Kiriwa Coal Mine, built by China in the early eighties and unsuccessfully privatized in 2005, was last year saved by the Chinese government, which agreed to pump $400 million into its renovation. The typically opaque deal was controversial, not least because former Tanzanian president Benjamin Mkapa was reportedly amongst the mine’s owners. Chinese investors are now majority shareholders in the Friendship Textile Mill, and even the Tazara railway, which has been run down to the point of virtual collapse, is flirting with a Chinese takeover. In 2010, the Chinese government granted the operating authority a $39 million interest free loan and will provide it with six new locomotives at the end of this year.

China is likely to pump even more money into the Tanzanian economy over the next few years. It is a favorite for China’s next rollout of special economic zones, and speculation abounds that China is building infrastructure in Southern Africa with the specific goal of directing more of Africa’s trade into the port at Dar es Salaam, where the Sino-Tanzania Joint Shipping Company has operated for the last 43 years. Friendship seems to have its rewards.